Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On March 1, 2010, a 21.2% across-the-board cut in Medicare physician fee schedule (MPFS) payments went into effect under the statutory sustainable growth rate (SGR) formula. While Congress had temporarily blocked the cut and maintained rates at 2009 levels for the first two months of 2010, that authorizing legislation expired February 28, 2010. Lawmakers are working to implement a fee schedule fix as part of job promotion legislation, but while the details of the bill and the timing for enactment still are uncertain, action in the next week is anticipated with reports that extension of the freeze may be continued until September 30, 2010. In the meantime, CMS has instructed its contractors to hold for the first 10 business days of March MPFS claims with dates of service on or after March 1, 2010.  According to CMS, the hold should have a minimum impact on provider cash flow, since current law provides that clean electronic claims are not paid before 14 calendar days (29 for paper claims) after the date of receipt. 

** March 3 update:  In light of Congressional passage of a one-month extension of the physician fee schedule fix, CMS announced it has lifted the hold on MPFS claims. 

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CMS has announced a realignment of its organization structure and named new senior CMS appointments. Most notably, CMS has established a new Office of External Affairs and Beneficiary Services, along with the following four “Centers”: the Center for Medicare; the Center for Medicaid, CHIP and Survey & Certification; the Center for Program Integrity; and the Center for Strategic Planning. CMS also named Marilyn Tavenner, former Secretary of Health and Human Resources for the Commonwealth of Virginia, to the new position of CMS Principal Deputy Administrator. In addition, CMS announced that Peter Budetti, an MD/JD who has addressed health care fraud in a number of capacities, will be serving as Deputy Administrator for Program Integrity. The Obama Administration still has not named a candidate for CMS Administrator; Charlene Frizzera continues to serve as Acting Administrator. 

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The Centers for Medicare & Medicaid Services (CMS) has issued its “Advance Notice” of changes to payment methodologies for Medicare Advantage (MA) organizations and Medicare Part D prescription drug plans for calendar year 2011. This year CMS is combining the Advance Notice with the annual “Call Letter” to health plans outlining upcoming non-payment policy changes. Among other thing, the Advance Notice includes: a preliminary estimate of a 1.38% change in the national per capita MA growth percentage; changes in risk adjustment payment methodologies; a 3.41% risk adjustment to reflect differences in coding patterns between MA plans and fee-for-service providers; and an update to the standard Part D benefit parameters. Other issues addressed in the Call Letter include practices to curb waste of unused drugs, reassignment, release of data, and drug coverage for beneficiaries with ESRD. Comments will be accepted until March 5, 2010. 

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Medicare is the “secondary” payer of health benefits for Medicare beneficiaries when another entity is the “primary” payer. Under new MSP enforcement rules, all entities that are considered primary payers and meet the definition of a responsible reporting entity (RRE) must register with CMS and comply with certain reporting requirements. Such RREs include (1) group health plans, and (2) non-group health plan (NGHP) arrangements, such as carriers of liability insurance (including self-insurance), no-fault insurance, and workers’ compensation. CMS recently announced it is extending its reporting requirement for NGHPs until January 1, 2011. CMS also has posted three new alerts on NGHP RRE Compliance, NGHP Alert Risk Management and NGHP RREs Who Must Report.

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CMS has posted new "Telemarketing FAQs" to supplement the OIG's recent revisions to its Special Fraud Alert on Telemarketing by Durable Medical Equipment Suppliers.  Among other things, the FAQs address circumstances under which DME suppliers can contact a beneficiary based on the receipt of a physician’s order.  For a more information, see our discussion on our sister blog, Life Sciences Legal Update.

 

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Today CMS announced that it is delaying until January 3, 2011 its controversial policy under which it will institute edits to deny Medicare claims for Part B items and services if the physician or non-physician practitioner who ordered the item or service does not have a current enrollment record. CMS considers a current enrollment record to be one that is in the Medicare Provider Enrollment, Chain and Ownership System (PECOS) and also contains the physician/non-physician practitioner's National Provider Identifier (NPI). The delay in the policy from April 5, 2010 until January 3, 2011 is intended to "give physicians and non-physician practitioners who order items or services for Medicare beneficiaries or who refer Medicare beneficiaries to other Medicare providers or suppliers sufficient time to enroll in Medicare or take the action necessary to establish a current enrollment record in Medicare" before the claims edits go into effect.

 

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On February 4, 2010, the Centers for Medicare & Medicaid Services (CMS) released its health spending projections for 2009, estimating that growth in U.S. national health expenditures (NHE) increased 5.7%, compared to 4.4% in 2008. This 2009 growth rate exceeded the growth in the gross domestic product (-1.1%) and brought total national health spending to $2.5 trillion, or 17.3% of the GDP (compared to 16.2% in 2008). The increasing rate of spending is attributable in part to faster growth in Medicaid spending (9.9% compared to 4.7% in 2008), as the recession resulted in increased Medicaid enrollment.  According to CMS, the NHE growth is expected to decelerate in 2010 to 3.9%, but much of this projected slowdown is attributable to the 21.2% reduction in Medicare physician payment rates scheduled to go into effect in March 2010 -- but which Congress is expected to mitigate through legislation (as discussed above). If, on the other hand, physician payment rates are held at 2009 levels, total health spending is projected to grow 4.7%. By 2019, national health spending is expected to reach $4.5 trillion and comprise 19.3% of GDP. 

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As previously reported, CMS is requiring Medicare physicians and non-physician practitioners who refer Medicare beneficiaries to other Medicare providers or suppliers to update their enrollment records in the Medicare Provider Enrollment, Chain and Ownership System (PECOS). As of April 5, 2010, new claims edit processes could lead to rejected claims for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and other Part B items if the ordering physician has not updated his/her enrollment records. To enable providers and suppliers to ensure that a referring physician is enrolled in PECOS, CMS has posted a file containing the National Provider Identifier (NPI) and the name of all physicians and non-physician practitioners who are eligible to order and refer in the Medicare program and who have current Medicare enrollment records. The file will be updated periodically. Background information on the PECOS enrollment requirement is available here. 

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On January 30, CMS issued a Medicare Benefit Policy Manual transmittal entitled "Revision of Definition of Compendia as Authoritative Source for Use in the Determination of a Medically-Accepted Indication of Drugs/Biologicals Used Off-label in Anti-Cancer Chemotherapeutic Regimens." The transmittal makes changes to conform to the MIPPA compendia requirement that provides that effective January 1, 2010, no compendia may be included on the list of authorized compendia unless it has a publicly-transparent process for evaluating therapies and for identifying potential conflicts of interests.

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CMS has rescinded its controversial DMEPOS "consignment closet" transmittal, which would have prohibited certain arrangements where an enrolled DMEPOS supplier maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician or other health care professional for the purpose of distribution. Specifically CMS states in a revised version of the document  that it is rescinding the September 1, 2009 transmittal, which was scheduled to go into effect March 1. 2010, "to consider other implementation dates."

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CMS has released the agenda for its February 23, 2010 Program Advisory and Oversight Committee (PAOC) meeting.  Topics to be covered include:  a bidding status update; review of the DBIdS system performance; an accreditation update; supplier and beneficiary educational plans; contract supplier oversight and monitoring; a tentative timeline for Round 2; and a discussion of the subdivision of the NYC, Los Angeles, and Chicago metropolitan statistical areas for bidding purposes.   The agency expects to begin registration for the meeting early next week.  CMS also posted its first DMEPOS competitive bidding "program preview" document at the "DMEPOS Toolkit" web page.  The document reviews the program basics, highlights the "proven results" of the DMEPOS bidding demonstration program, and discusses the agency's implementation plans.  CMS also released a MLN Matters article covering the same materials. 

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On March 10-11, 2010, CMS is convening a Technical Expert Panel (TEP) to assist in the development of new ESRD quality measures.  Six Clinical TEPs will evaluate evidence related to the development of new measures related to: Anemia Management; Mineral Metabolism; Vascular Access Infection Rate; Pediatric Adequacy; Pediatric Anemia; and Fluid Weight Management. CMS is accepting nominations for the TEP until February 17, 2010.   

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On January 15, 2010, CMS issued a transmittal on “Various OIG Reports that have Medical Review Implications.”  The transmittal instructs Medicare contractors to take steps to strengthen program safeguards to prevent improper payment in areas identified by the HHS Office of Inspector General (OIG). Specifically, reports highlighted by CMS address negative pressure wound therapy pumps, ambulance transportation for skilled nursing facility residents, pressure reducing support surfaces, and hospice services. CMS instructs contractors to use the information contained in the OIG reports and follow the processes and procedures already in the Medicare Program Integrity Manual concerning data analysis, contractor strategies, and the progressive corrective action process.

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CMS Implements Two-Month Medicare Physician Fee Schedule Fix. President Obama has signed into law an appropriations bill that includes a 2-month freeze in physician fee schedule payments, instead of the 21.2% cut that was set to go into effect January 1, 2010. CMS has provided instructions to Medicare contractors on the processing of 2010 physician fee aschedule claims that temporarily had been put on hold while the legislation was pending. Under the CMS policy, contractors are directed to begin processing claims at the new rates no later than January 19, 2010. CMS also has extended the 2010 Annual Participation Enrollment Program deadline from January 31, 2010, to March 17, 2010 in light of the temporary changes in physician rates. CMS notes, however, that the effective date for any participation status change during the enrollment extension remains January 1, 2010, and will be in force for the entire year.

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CMS has issued an educational article for providers regarding certain Medicare payment policies that expired as of December 31, 2009, including the therapy cap exceptions process and the ability of independent laboratories to bill for the technical component of physician pathology services furnished to hospital patients. CMS notes that these policies could be extended by Congress. Health care providers therefore may choose, to the extent possible, to hold their claims for Medicare services provided on or after January 1, 2010 until it becomes clearer as to whether new legislation will be enacted to extend these provisions. 

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The final 2010 Medicare home health prospective payment system (HH PPS) rule established an annual limitation on Medicare outlier payments that can be paid to each home health agency (HHA). Specifically, effective January 1, 2010, outlier payments may comprise no more than 10% of the HHA’s total HH PPS payments for the year. CMS has issued instructions to contractors and a provider educational article about how the new policy is being implemented, including the use of a quarterly reconciliation process. 

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CMS has announced that overall US health spending grew 4.4% in 2008 – the slowest rate of growth since CMS began compiling this data in 1960. CMS attributes this spending slowdown to the effects of the economic recession. Nevertheless, health spending continued to increase faster than did the nation’s gross domestic product (GDP), which grew at 2.6%, according to figures released January 5, 2010. Health spending totaled $2.3 trillion in 2008, or $7,681 per person, and comprised 16.2 percent of the GDP. Health care spending by public programs, including Medicare and Medicaid, rose 6.5% in 2008, while health care spending by private sources grew only 2.6%.

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CMS has released the 2010 Medicare clinical laboratory  fee schedule.  In addition, CMS has issued a transmittal providing instructions to contractors regarding the 2010 clinical lab fee schedule update, including mapping for new lab test codes and updates for laboratory costs subject to the reasonable charge payment.

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CMS has posted the first quarter 2010 Medicare Part B drug Average Sales Price (ASP) amounts. CMS notes that average drug prices for the first quarter of 2010 generally remain stable compared to fourth quarter 2009 prices. In fact, prices for the top Part B drugs decreased by an average of 1.1 percent, with prices for the majority of the higher-volume drugs changing 2 percent or less. CMS attributes the decreases in the top drugs to a number of competitive market factors, such as multiple manufacturers, alternative therapies, new products, recent generic entrants, or market shifts to lower-priced products.

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CMS published a notice on November 23, 2009 withdrawing a controversial August 2007 proposed rule that would have amended the definition of Medicaid “rehabilitative services.” Separately, on November 30, 2009, CMS published a final rule further delaying two rules regarding Medicaid benefit packages and beneficiary cost-sharing. Specifically, CMS is again delaying the effective date of its December 3, 2008 final rule that provides states with increased flexibility to define the scope of covered Medicaid services, along with a November 25, 2008 final rule designed to enhance state flexibility to impose premium and cost sharing requirements on certain Medicaid recipients. The new effective date of the rules is July 1, 2010. 

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The Department of Health and Human Services (HHS) has announced the FMAP and Enhanced FMAP amounts for FY 2011, which begins October 1, 2010. These rates will be used by HHS in determining the amount of federal matching for state Medicaid, Children's Health Insurance Program, and other HHS program payments.  

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CMS has provided clarifying information regarding the new Home Health Prospective Payment System (HH PPS) outlier policy, which was established in the final Medicare HH PPS update for 2010. 

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CMS has announced another opportunity for the public to submit quality measure suggestions for consideration for use in the 2011 Physician Quality Reporting Initiative (PQRI). Suggestions must be received by December 16, 2009. The public will have a comment opportunity once CMS announces the measures it will propose for the 2011 PQRI. 

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CMS is requiring Medicare physicians and non-physician practitioners who refer Medicare beneficiaries to other Medicare providers or suppliers to update their enrollment records in the Medicare Provider Enrollment, Chain and Ownership System (PECOS). CMS had previously announced that new claims edit processes could lead to rejected DMEPOS and other Part B claims if the ordering physician has not updated his/her enrollment records, effective January 4, 2010. CMS is now delaying the implementation of the claims edits until April 5, 2010, to give physicians and non-physician practitioners sufficient time to establish a current Medicare enrollment record. 

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CMS has released its 2009 Medicare and Medicaid improper payment rates, reflecting a more complete accounting methodology and Medicare claims review process which has resulted in higher overall reported Medicare improper payment rates. Specifically, CMS is reporting a 2009 Medicare fee-for-service error rate of 7.8%, compared to 3.6% in 2008. The baseline composite Medicare Advantage error rate, based on payment year 2007, is 15.4 percent. The composite Medicaid error rate is 8.7%, compared to 10.5% the prior year. Separately, on November 23, President Obama issued an Executive Order on “Reducing Improper Payments and Eliminating Waste in Federal Programs.” The order directs various agencies and departments to intensify efforts to eliminate payment error, waste, fraud, and abuse in the major federal programs through a series of steps, including greater transparency in reporting significant payment errors; a focus on identifying and eliminating the highest improper payments; accountability for reducing improper payments among executive branch agencies and officials; and coordinated federal, state, and local government action in identifying and eliminating improper payments.

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CMS has released the 2010 Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule.  According to a CMS transmittal explaining the 2010 DMEPOS fee schedule update, the DMEPOS fee schedule amounts are being updated for 2010 by the percentage increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending June 2009. Since the change in the CPI-U for this period is negative (-1.41%), the percentage increase in the CPI-U used to update the DMEPOS fee schedule amounts for 2010 is 0 percent.

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CMS is instituting new requirements to ensure that the ordering/referring provider on a DMEPOS claim is enrolled in Medicare and has a valid National Provider Identifier on record. Effective January 4, 2010, this could lead to rejected DMEPOS claims if the ordering physician has not updated his/her enrollment records. 

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On November 2, 2009, CMS posted the 2010 update to the Healthcare Common Procedure Coding System (HCPCS) code set.  

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CMS has announced Medicare Part A and Part B premium and deductible levels for 2010. The official notices were published in the Federal Register on October 22, 2009.

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CMS has officially opened the bidding window for the Round 1 Rebid of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program, and bids are due by December 21, 2009.  By way of background, under competitive bidding, only suppliers who are successful bidders will be eligible to furnish certain categories of DMEPOS to Medicare beneficiaries in certain geographic areas (with very limited exceptions). Successful bidders will be paid based on the median of the winning suppliers’ bids for each of the selected items in the region, rather than the Medicare fee schedule or supplier bid amount. All suppliers interested in submitting bids must register with CMS’s contractor by November 4, 2009; suppliers that do not register cannot bid and are not eligible for contracts. The deadline for submitting hardcopy financial documents for the “covered document review” process, under which CMS will notify suppliers of any missing financial documents, is November 21, 2009 (note that CMS will not provide information to bidders on whether submitted documents are acceptable, accurate or meet applicable requirements).  For detailed instructions and guidance related to submitting bids, see the Competitive Bidding Implementation Contractor (CBIC) website; other background information regarding the DMEPOS competitive bidding program is available here.

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CMS recently announced that it is on track to open the 60-day bid window for the Medicare DMEPOS competitive bidding program on October 21, 2009. CMS expects to officially open the bid window through a listserv/e-mail message. In the meantime, CMS’s Competitive Bidding Implementation Contractor (CBIC) continues to post guidance documents, frequently-asked questions, bidding information charts, and other educational resources related to competitive bidding on its web site.

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On October 9, 2009, CMS issued a transmittal to contractors highlighting several HHS Office of Inspector General (OIG) reports with recommendations on addressing Medicare’s vulnerability to questionable claims. In particular, CMS cites OIG reports on Medicare Part B chemotherapy administration payments, nonphysicians who performed Medicare physician services, inappropriate Medicare payments for chiropractic services, and Medicare Part B billing for ultrasound. CMS directs contractors to review claims data for services mentioned in the OIG reports and take appropriate action (e.g., prepayment edits and reviews, postpayment reviews, and physician/supplier education), if the data warrants action. 

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CMS is accepting applications for the 2011 Healthcare Common Procedure Coding System (HCPCS) update. Completed applications must be received by CMS by January 4, 2010.

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Under the MSP statute, Medicare is the “secondary” payer of health benefits for Medicare beneficiaries when another entity is the “primary” payer of health benefits. Under new MSP enforcement rules, all entities that are considered primary payers under the MSP statute and that meet the definition of a responsible reporting entity (RRE) must register with CMS and comply with certain reporting requirements. In brief, such RREs include group health plans and non-group health plan arrangements, such as carriers of liability insurance (including self-insurance), no-fault insurance, and workers’ compensation. Registration for certain types of RREs (i.e., liability insurance (including self-insurance), no-fault insurance, and workers’ compensation) must be complete by September 30, 2009 and reporting must begin April 1, 2010. (Reporting for group health plan-type RREs is subject to a different timeline.) A Reed Smith Alert regarding the MSP registration and reporting requirements is available here.

 

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CMS has issued a Medicare Program Integrity Manual describing the “rare and unusual circumstances” in which Medicare contractors may make exceptions to clinical criteria described in an LCD during complex medical review. The transmittal is effective October 13, 2009. 

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On September 18, 2009, CMS sent a letter to State Survey Agency Directors transmitting an advance copy of the hospice sections of Hospice State Operations Manual, including revised interpretive guidance related to revised hospice conditions of participation that went into effect in December 2008.

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CMS is establishing a demonstration program to support innovative state-based “advanced primary care” initiatives. These projects, also called a “patient-centered medical home” model, use a team approach to coordinate a patient’s care. CMS seeks to test whether these arrangements reduce unjustified variations in utilization and expenditure across delivery systems, increase patient safety, increase beneficiary participation in health care decision-making, and decrease expenditures. CMS will begin soliciting applications from states this fall, and the demonstration is slated to begin in early 2010.

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CMS has released the October 2009 Medicare Part B drug average sales price (ASP) update. According to CMS, average drug prices in the market generally remain stable, with fourth quarter prices for the top Part B drugs increasing by less than 1 percent compared to the previous quarter.

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The National Supplier Clearinghouse reports that CMS has clarified the Medicare surety bond and accreditation exemptions for optometrists.  Specifically, optometrists who own their own optical shop and furnish only cataract glasses and cataract lenses are currently exempt from the requirements concerning bonding and accreditation. This applies even if there is an optician at the optical shop.

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CMS has delayed until March 1, 2010, the implementation date of a controversial new policy on "Compliance Standards for Consignment Closets and Stock and Bill Arrangements." By way of background, under a policy adopted last month, CMS is defining and prohibiting certain arrangements where an enrolled supplier of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician, non-physician practitioner or other health care professional for the purpose of distribution (commonly referred to as a “consignment closet” or “stock and bill” arrangement). The original implementation date for the policy was September 8, 2009. 

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On September 1, 2009, CMS issued guidance to state Medicaid directors on the American Recovery and Reinvestment Act (ARRA) provisions allowing payment to providers who adopt and become meaningful users of electronic health records. Specifically, CMS has outlined allowable state expenses related to the administration of the provider incentive payments. CMS will publish proposed regulations to formally implement this policy later this year. 

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CMS has issued an educational article on “Billing for the Administration of the Influenza A (H1N1) Vaccine,” which explains Medicare coverage and reimbursement rules for the H1N1 vaccine and also addresses seasonal flu coverage and reimbursement. 

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On August 17, 2009, CMS announced three new Medicare value-based purchasing demonstrations. The Nursing Home Value-Based Purchasing Demonstration will reward facilities that can improve or deliver high quality care in four specific areas: staffing, resident outcomes, avoidable hospitalizations, and reductions in deficiency citations. It will involve nearly 200 nursing homes in three states, and will run from July 2009 through June 2012. The Medicare Hospital Gainsharing Demonstration and the Physician Hospital Collaboration Demonstration are evaluating mechanisms for hospitals and physicians to join forces to improve quality and efficiency of care, establish effective means to govern use of inpatient resources, reduce costs, and share the rewards. The agency also provided an update on three ongoing VBP demonstrations: the Hospital Quality Incentive Demonstration, the Physician Group Practice Demonstration, and the Medicare Care Management Performance Demonstration.

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Medicare-enrolled DMEPOS suppliers are required to submit a valid surety bond to the NSC by October 2, 2009 to obtain/maintain Medicare billing privileges (subject to certain exceptions). The National Supplier Clearinghouse has released a lengthy list of responses to frequently-asked questions about the surety bond requirement.
 

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On August 17, 2009, CMS opened registration to all suppliers interested in participating in the Round 1 Rebid of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. 

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CMS issued a Program Integrity Manual transmittal on August 7, 2009 on "Compliance Standards for Consignment Closets and Stock and Bill Arrangements." Through the transmittal, CMS is defining and prohibiting certain arrangements where an enrolled DMEPOS supplier maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician, non-physician practitioner or other health care professional for the purpose of distribution (commonly referred to as a “consignment closet” or “stock and bill” arrangement). In addition, the transmittal instructs providers that use of consignment closets and/or stock and bill arrangements must be in compliance with current standards. The transmittal is effective September 8, 2009.

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CMS has recently issued guidance to state survey agencies on a number of issues, including: Interpretive Guidelines for Long-Term Care Facilities (infection control programs); Surveying Facilities That Use Electronic Health Records; EMTALA Requirements and Options for Hospitals in a Disaster; Clarification of Ambulatory Surgical Center Interpretive Guidelines; Initial Surveys of CAH Distinct Part Units Changed to Tier 4 Priority Status; and Priority Order of Quality Indicator Survey National Implementation in States. In addition, CMS has issued guidance to State Medicaid Directors on the ARRA “prompt pay” requirements.

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On August 13, 2009, CMS announced that the average monthly premium for standard Part D prescription drug coverage will be $30 in 2010, up $2 from the 2009 average premium. For 2010, CMS will be conducting a “Medicare Demonstration to Revise the Part D Low-Income Benchmark Calculation,” which will have the effect of decreasing the number of low-income beneficiary reassignments to plans with premiums below the 2010 subsidy amount. Nevertheless, CMS estimates that approximately 800,000 Medicare beneficiaries who are eligible for low-income subsidies will need to change plans in 2010 to remain in a zero-premium plan. CMS also released the 2010 national average monthly bid; the base beneficiary premium; the regional low-income subsidy premium amounts for 2010; and the 2010 Medicare Advantage regional preferred provider organization benchmarks. In addition, CMS has revised its Medicare Marketing Guidelines to reflect Medicare Improvements for Patients and Providers Act changes, effective August 7, 2009.

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On August 3, 2009, CMS announced the detailed  timeline for the Medicare DMEPOS competitive bidding program Round One Rebid.   Key dates include the following:  registration for bidding opens August 17, 2009; the bid window opens October 21, 2009 and closes December 21, 2009; the "covered document review date" (deadline to submit financial documents) is November 21, 2009; CMS announces single payment amounts and begins the contracting process in June 2010; CMS announces contract suppliers in September 2010; and the new program begins January 1, 2011.  (Note that certain of these documents are target dates and are subject to change.)  A variety of background documents, including bidding forms and registration FAQs are available on the Competitive Bidding Implementation Contractor (CBIC) web site. 
 

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CMS has expanded its Hospital Compare website to include updated information on 30-day mortality rates for patients with heart failure, acute myocardial infarction, and pneumonia, and to include new data on 30-day readmissions rates for patients originally admitted for one of these three conditions.

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CMS has released an educational article identifying steps suppliers should take in preparation for the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program to ensure successful bidder registration.

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CMS is requesting Office of Management and Budget (OMB) approval of revisions to the Hospital and Hospital Health Care Complex Cost Report for cost reporting periods beginning on or after February 1, 2010.  CMS will accept comments on the proposed revisions through August 31, 2009.  A summary of changes is available after the jump. 
 

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CMS has issued a memo to State Survey Agency Directors announcing the release of a report entitled “Evaluationof the Quality Indicator Survey (QIS)," a staged nursing home survey process for the systematic review of all regulatory areas. The memo also outlines CMS' action plan for future QIS evaluation initiatives. 

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CMS has announced revisions to its guidance for nursing home surveyors, effective June 12, 2009. The new guidelines emphasize resident rights in areas such as: ensuring residents live with dignity; offering choices in care and services; accommodating the environment to each resident’s needs and preferences; and creating a more homelike environment for residents, including access for visitors.  Separately, CMS has issued a memo on the use of nursing facility civil money penalty (CMP) funds by states.  Specifically, the memo: clarifies that states may direct collected CMP funds to entities other than nursing homes as long as funds are used in accordance with statutory intent; shares innovative practices for states to consider when deciding how to use CMP funds to improve the quality of care and life for nursing home residents; and announces that CMS will consider reporting CMP amounts that have been returned to each state. 

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CMS is alerting providers that certain individuals are sending faxes to physician offices posing as the Medicare carrier or Medicare Administrative Contractor.  The fax instructs physician staff to respond to a questionnaire to provide account information within 48 hours in order to prevent a gap in Medicare payments.  CMS recommends that providers check with their contractor before submitting any information in response to such a solicitation, and to only send information to actual contractor addresses posted on the CMS web site. 

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On June 17, 2009, CMS issued guidance to state Medicaid directors on implementation of the American Recovery and Reinvestment Act of 2009 (ARRA) Medicaid and Children’s Health Insurance Program provisions, including details on payments that should not be counted for purposes of eligibility for federal programs. 

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CMS has issued a memo to state survey agencies reiterating current policy that all surveys must be unannounced for all providers and suppliers, except for standard Clinical Laboratory Improvement Amendments surveys of laboratories and other limited exceptions. 

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CMS is working with states to implement a new survey process to promote better infection control practices in ambulatory surgical centers (ASCs). Specifically, $10 million of ARRA funding is being made available to states in FYs 2009 and 2010 to implement a new survey process and increase the frequency of inspections for ASCs. In addition to remedying current infection control lapses and preventing future healthcare-associated infections, the funds will help states avoid otherwise planned layoffs or furloughs and/or recruit additional surveyors to inspect more ASCs.  

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CMS has announced a website dedicated to information on the health information technology provisions in the American Recovery and Reinvestment Act of 2009, including information on Medicare and Medicaid incentives for electronic health records adoption. 

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The White House has proposed $313 billion in new Medicare and Medicaid cuts over 10 years, in addition to the provisions included in the Administration's proposed FY 2010 budget. Among other things, the Administration is endorsing: incorporating productivity adjustments into Medicare payment updates; reducing hospital subsidies for treating the uninsured as coverage increases; paying "better" prices for Medicare Part D drugs (including reducing reimbursement for beneficiaries dually eligible for Medicare and Medicaid); increasing the equipment utilization factor for advanced imaging from 50 percent to 95 percent; adopting MedPAC’s recommendations for 2010 payments to skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals; and cutting waste, fraud, and abuse (including prepayment review for physicians in high-risk areas or those that order a high volume of high-risk services such as durable medical equipment, home health, and home infusion services).

The following chart summarizes the Obama Administration's health reform financing proposals released to date:

Source	Health Care Reserve Fund ($ in billions)
	10 years
FY 2010 Budget -  Medicare and Medicaid Savings -  Revenues	$635 $309 $326
Additional Medicare and Medicaid Savings -  Incorporate productivity adjustments into Medicare payment      updates -  Reduce hospital subsidies for treating the uninsured as       coverage increases -  Pay better prices for Medicare Part D drugs -  Other	$313 $110  $106  $75 $22
Total	$948

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CMS has posted the July 2009 Medicare Part B drug average sales price (ASP) files.  CMS notes that prices generally have been stable, with prices for the top part B drugs increasing by less than one percent over the previous quarter, and most of the higher-volume drugs (30 out of the top 50), changing 2 percent or less.
 

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CMS is seeking White House Office of Management and Budget (OMB) approval of revisions to the draft 2010 Medicare Part D prescription drug plan reporting requirements (see ). OMB will accept comments on the revised forms through June 22, 2009.

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CMS has posted a white paper on "Potential Conflict of Interest in the Production of Drug Compendia" produced by the Duke Evidence-based Practice Center under contract to the Agency for Healthcare Research and Quality (AHRQ). The report addresses, among other things: where in the compendia processes conflict of interest may arise; an "ethical framework" for evaluating potential conflicts; a review of the conflict of interest policies of the four compendia used in Medicare coverage determinations; and a discussion of the adequacy of current compendia approaches and ways to minimize conflicts of interest.

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CMS has posted the July quarterly update for the 2009 Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) fee schedule.

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While bidding under the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program will take place later this year, the program will not actually go into effect until January 1, 2011 under a tentative timeline just released by the Centers for Medicare & Medicaid Services (CMS). This tentative implementation schedule for the Round 1 rebid, made public at a June 4, 2009 meeting of the Program Advisory and Oversight Committee (PAOC), includes the following milestones:

Spring 2009

• Pre-bidding supplier awareness campaign began
• PAOC meeting

Summer 2009

• CMS announces detailed bidding/education event schedule
• Bidder education campaign begins
• Bidder registration period to obtain user IDs and passwords begins

Fall 2009

• Bidding begins
• Covered document review process begins (bidders may submit bid packages to qualify for review of missing financial documents)

Winter 2009/Spring 2010

• Bid evaluation
• Announcement of single payment amounts
• Contract process begin

Summer 2010

• Contract suppliers announced
• Contract supplier education campaign begins

Fall 2010

• Beneficiary, referral agency, and general supplier education campaign

January 2011

• Program implementation

Also at the PAOC meeting, CMS discussed improvements to the on-line bidding system in the wake of numerous technical problems encountered during the initial bidding period in 2007 (the original round of the program, which went into effect briefly last summer, subsequently was blocked by Congress). In addition, CMS and its contractors stressed the importance of preparing now for the bidding process, including: getting appropriate state licenses, updating Medicare enrollment files with the National Supplier Clearinghouse, and getting accredited and bonded. The session also covered financial documentation, education activities, new supplier issues, and bidding for mail-order diabetic testing supplies, among other things.  We have posted a copy of the slides from the June 4, 2009 PAOC meeting on our web site.  For Reed Smith news and analysis related to the DMEPOS competitive bidding program, click here.   

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HHS Secretary Kathleen Sebelius has announced the appointment of Cindy Mann to serve as Director of CMS’s Center for Medicaid and State Operations.

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Today CMS announced the general timeline for the next round of DMEPOS competitive bidding program: 

Spring 2009

• CMS Begins a Pre-Bidding Supplier Awareness Campaign
• Program Advisory And Oversight Committee (PAOC) Meeting on June 4, 2009

Summer 2009

• CMS Announces the Bidding Schedule and the Schedule of Supplier Education Events
• CMS Begins Bidder Education Campaign
• Bidder Registration Period to Obtain User IDs and Passwords Begins

Fall 2009

• Supplier Bid Window Opens

CMS notes that suppliers wishing to participate in the Round One Rebid of the Medicare DMEPOS competitive bidding program, including suppliers that were awarded contracts in the first Round One which occurred in 2007, will need to re-register and submit a new bid application for the Round One Rebid competition. As in the first Round One program, suppliers must meet all applicable eligibility, financial, quality, and accreditation standards in order to be awarded a contract.  Key steps suppliers need to take to get ready for DMEPOS competitive bidding registration and bid submission include getting appropriate state licenses, updating Medicare enrollment files with the National Supplier Clearinghouse (NSC) and getting accredited and bonded.

Reed Smith’s Life Sciences Health Industry Alert, “CMS Prepares to Re-Launch Medicare DMEPOS Competitive Bidding—Tips for Potential Bidders,” also highlights steps suppliers can take now to prepare for the coming bidding cycle based on the lessons learned during the first round of bidding.

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On May 20, 2009, CMS issued an updated educational article on DMEPOS supplier accreditation requirements to provide information for suppliers who choose not to become accredited. CMS notes that a DMEPOS supplier’s Medicare Part B billing privileges will be revoked on or after October 1, 2009 if the supplier fails to obtain accreditation or a voluntary termination has not been received by the National Supplier Clearinghouse by September 30, 2009. If a supplier chooses not to become accredited, they must submit an amended CMS 855S to prevent revocation and subsequent exclusion from the Medicare program. For pharmacies that choose not to become accredited but wish to remain a DMEPOS supplier to continue to bill Medicare for drugs and biologicals only, an amended CMS 855S must be completed, reflecting which drugs and biologicals the pharmacy will provide to beneficiaries.

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On May 26, 2009, the Federal Comparative Effectiveness Research Coordination Council announced that it is seeking comment on its draft definition of comparative effectiveness research and its draft prioritization criteria for comparative effectiveness research and investments. With regard to prioritization, the Council proposes to use the following criteria for determining “scientifically meritorious research and investments” potential impact (based on prevalence of condition, burden of disease, variability in outcomes, and costs of care); potential to evaluate comparative effectiveness in diverse populations and patient sub-populations; uncertainty within the clinical and public health communities regarding management decisions; addresses need or gap unlikely to be addressed through other funding mechanisms; and potential for multiplicative effect (e.g. lays foundation for future comparative effectiveness research or generates additional investment outside government).   Comments are being accepted but no comment deadline is specified.

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CMS has released a draft version of the Minimum Data Set (MDS) 3.0 resident assessment instrument item set for nursing home residents. The final version is scheduled for publication in October 2009. In the May 12, 2009 proposed skilled nursing facility prospective payment rule, CMS has proposed requiring Medicare skilled nursing facilities and Medicaid nursing facilities to use MDS 3.0 effective October 1, 2010.

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In another indication that CMS is gearing up to launch DMEPOS competitive bidding, CMS has submitted to the Office of Management and Budget (OMB) a request to modify the forms to be used with the Round 1 Rebid of the DMEPOS competitive bidding program.  CMS states that it will use a modified version of the Request For Bids instructions and accompanying forms so that suppliers will be better able to identify and understand the requirements to submit a bid in the competitive bidding program.  The draft bidding form, instructions, and supplementary appendices (including details on financial documentation requirements) have been posted, and OMB is accepting comments on the proposed forms until June 18, 2009. 

Reed Smith’s Life Sciences Health Industry Alert, “CMS Prepares to Re-Launch Medicare DMEPOS Competitive Bidding—Tips for Potential Bidders,” highlights steps suppliers can take now to prepare for the coming bidding cycle based on the lessons learned during the first round of bidding.
 

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CMS is preparing to re-launch its controversial competitive bidding program for Medicare suppliers of certain types of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Under competitive bidding, only suppliers who are successful bidders will be eligible to furnish certain categories of DMEPOS to Medicare beneficiaries in certain geographic areas (with very limited exception). Under competitive bidding, successful bidders will be paid based on the median of the winning suppliers’ bids for each of the selected items in the region, rather than the Medicare fee schedule or supplier bid amount. This will be CMS’s second attempt to institute DMEPOS competitive bidding, after the first round of bidding was blocked by Congress last year because of widespread concerns about how the program was implemented. Reed Smith’s Life Sciences Health Industry Alert, “CMS Prepares to Re-Launch Medicare DMEPOS Competitive Bidding—Tips for Potential Bidders,” highlights seven steps suppliers can take now to prepare for the coming bidding period based on the lessons learned during the first round of bidding.

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CMS has released the 2011 HCPCS update application form and instructions. To be considered for inclusion in the year 2011 HCPCS update, completed recommendation packets must be received by the close of business on Monday, January 4, 2010.

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CMS has released the 2009 Data Submission Specifications for use in the 2009 Physician Quality Reporting Initiative (PQRI) Electronic Health Record test.

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CMS has announced its plans to implement the Minimum Data Set (MDS) 3.0 skilled nursing facility (SNF) patient assessment instrument. The goals of the MDS 3.0 revision include introducing advances in assessment measures, increasing the clinical relevance of items, improving accuracy and validity, including more resident interview items, shortening the tool, and improving user satisfaction to encourage quality improvement implementation. CMS plans to begin implementing the MDS 3.0 on October 1, 2010, including collecting national data using MDS 3.0 and basing the SNF PPS on MDS 3.0 data. Public SNF quality reporting using MDS 3.0 data will begin in October 2011. 

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On April 10, 2009, CMS issued a transmittal on billing routine cost of clinical trials, in which it announced that it is eliminating the need for differentiation between a diagnostic clinical trial service and a therapeutic clinical trial service. CMS also is providing that, for beneficiaries enrolled in a managed care plan, institutional providers must not bill outpatient clinical trial services and non-clinical trial services on the same claim. The policy is effective July 10, 2009.

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CMS issued a letter to State Survey Agency Directors on April 17, 2009 regarding ARRA provisions that expand the exceptions to the three-year moratorium on LTCH or LTCH satellites previously enacted in the Medicare, Medicaid, and SCHIP Extension Act. The new exception permits an increase in the number of beds in an existing LTCH or LTCH satellite when the bed increase was authorized under a Certificate of Need issued within a specified timeframe. CMS is amending its previous guidance to state survey agencies to reflect this statutory change. CMS Regional Offices will determine whether a facility qualifies for the new exception to the moratorium.  

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CMS has announced that it is exempting podiatrists from the DMEPOS accreditation requirement, even though they are not specifically listed as an exempt provider under the statute. CMS notes, however, that pedorthists are not exempt from the accreditation requirement at this time. 

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CMS has announced the 14 communities selected for its “Care Transitions Project,” which seeks to improve health care processes so that patients, their caregivers, and their entire team of providers can work together to eliminate unnecessary hospital readmissions. The project will include hospital and community system-wide interventions, interventions that target specific diseases or conditions, and interventions that target specific reasons for admission. Communities in the following regions have been selected to participate in the Project: Providence, R.I.; Upper Capitol Region, N.Y.; Western Pennsylvania; Southwestern New Jersey; Metro Atlanta East, Ga.; Miami.; Tuscaloosa, Ala.; Evansville, Ind.; Greater Lansing Area, Mich.; Omaha, Neb.; Baton Rouge, La.; North West Denver, Colo.; Harlingen, Texas; and Whatcom County, Wash.  

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CMS is accepting suggestions for possible reporting options for use in the 2010 Physician Quality Reporting Initiative (PQRI). All suggestions must be received by April 17, 2009.

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On April 3, 2009, CMS published a notice delaying for the second time the effective date of its December 3, 2008 final rule that provides states with increased flexibility to define the scope of covered Medicaid services. Specifically, CMS is delaying the effective date until December 31, 2009, and the agency is reopening the comment period through May 4, 2009. The Obama Administration had previously solicited comments on the Medicaid benefits package rule. Based on comments received in response to that solicitation, along with new provisions of the Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009 enacted on February 4, 2009, the Administration believes that it “may be necessary to revise a substantial portion of the December 3, 2008 final rule. 

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In January 2009, CMS published a notice delaying for 60 days the effective date of a November 25, 2008 final rule designed to provide state Medicaid agencies with increased flexibility to impose premium and cost sharing requirements on certain Medicaid recipients. On March 27, 2009, CMS further delayed the effective date until December 31, 2009. In addition, CMS reopened the comment period on the November rule until April 27, 2009. CMS is especially interested in comments on the effect of certain provisions of the American Recovery and Reinvestment Act of 2009 (ARRA or Recovery Act) involving premiums and cost sharing on the CMS policy. 

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CMS has published a final rule correcting a technical error in its January 2, 2009 final rule implementing surety bond requirements for certain Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). In a related development, CMS has updated the Medicare Program Integrity Manual to incorporate regulatory requirements that certain DMEPOS suppliers obtain a surety bond as a prerequisite for enrolling and maintaining one’s enrollment in the Medicare program.  

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On March 30, 2009, CMS issued its annual “Call Letter” for potential sponsors of Medicare Advantage (MA) and Part D Prescription Drug Plans (PDPs) in 2010. In announcing the Call Letter, CMS stated that it is taking steps to ensure that MA plan cost-sharing frameworks do not expose sicker beneficiaries to excessive out-of-pocket charges. MA organizations also are being directed to streamline their plan offerings to facilitate beneficiary plan selection. PDP sponsors also will be required to provide more information to beneficiaries on their utilization management criteria and their policies on drugs during the coverage gap. MA and PDP sponsors will be asked to conduct audits on the data provided to CMS about the operation of their plans, and existing program compliance audits will be more targeted, data-driven, and risk-based.  In addition, on April 6, 2009, CMS announced the 2010 Medicare Advantage growth trend and 2010 payment policies for MA and PDP organizations . CMS notes that for the first time, CMS will make a “coding pattern differences adjustment” to Medicare Advantage risk scores, reducing Medicare Advantage payment rates in 2010 to account for differences in disease coding patterns between MA organizations and the original Medicare program (Parts A and B). The adjustment will be applied as a uniform 3.41 percentage reduction to all Medicare Advantage plans’ Part C risk scores in 2010.

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CMS recently released an updated version of the CMS-855S enrollment application to be used by DMEPOS suppliers for initial enrollment, reactivations, reenrollments and to report changes of information. Among other things, the revised application includes new sections for reporting surety bond information, designating accreditation-exempt drugs and pharmaceuticals, and reporting business hours of operation. The new form should be used immediately and must be used beginning June 1, 2009. 

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CMS is launching the Nursing Home Value-Based Purchasing demonstration, which will test if incentive payments improve the quality of care and efficiency of nursing home operations. Under the demonstration, which is expected to run from July 2009 through June 2012, CMS will assess quality of care in selected nursing homes based on selected measures, and make additional payments to facilities with the highest scores or the greatest improvement in score. Savings generated by the project, such as reducing the number of avoidable hospitalizations, will fund state bonus payment pools. Nursing homes in Arizona, Mississippi, New York and Wisconsin are eligible to participate, and CMS will mail an application kit to each Medicare-certified nursing home in these states.

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On March 27, CMS published a notice soliciting nominations for membership on the Medicare Evidence Development & Coverage Advisory Committee (MedCAC), which advises the HHS Secretary on whether medical items and services are “reasonable and necessary” and therefore eligible for Medicare coverage. MedCAC is looking for experts in a number of area, with the most critical needs in the following fields: experts in Bayesian statistics; clinical epidemiology; clinical trial methodology; knee, hip, and other joint replacement surgery; ophthalmology; psychopharmacology; registries; rheumatology; screening and diagnostic testing analysis; and stroke. MedCAC also needs experts in biostatistics in clinical settings, cardiovascular epidemiology, cost effectiveness analysis, dementia, endocrinology, geriatrics, gynecology, minority health, observational research design, stroke epidemiology, and women’s health. Nominations will be considered if postmarked by April 27, 2009. 

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CMS has posted the April 2009 update to the average sales price (ASP) files, which will be used to pay for Medicare Part B covered drugs for the second quarter of 2009. CMS reports that average drug prices remain generally stable, with average payment amounts across all drugs increasing by less than one percent.

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CMS has re-issued the draft 2010 MA, MA-Prescription Drug (MA-PD), Cost-Based Plan, and Stand Alone Prescription Drug Plan (PDP) Call Letter for public commen. CMS originally released a draft Call Letter for public comment on January 8, 2009 and withdrew it on January 22, 2009 pending further review. Comments on the letter should be submitted to CMS by March 6, 2009; comments previously submitted on the earlier version should be resubmitted if still relevant. In addition, on February 20, 2009, CMS issued its “Advance Notice” of changes in methods that will be used to calculate capitation rates for payments to Medicare Advantage organizations for 2010. The Advance Notice also announces policy and technical changes to the payment methodology for MA plans and PDPs. The final capitation rates for each county are scheduled to be announced on April 6, 2009. The Advance Notice also describes changes in risk adjustment of MA and PDP payments. Comments on the Advance Notice also are due March 6, 2009. 

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On February 13, 2009, CMS issued a memo to state survey agency directors providing instructions on enforcement of certain recent revisions to physician-owned hospital disclosure requirements that went into effect October 1, 2008.

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CMS has released a Medicare Fraud and Abuse fact sheet to help providers identify and prevent fraud and abuse, and to guide providers if they suspect potential incidents of fraud.

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On February 24, 2009, CMS announced that growth in U.S. national health expenditures is expected to significantly outpace economic growth in 2008 and 2009 due to the recession. Specifically, growth in national health expenditures in 2008 is expected to be 6.1%, totaling $2.4 trillion in 2008, while growth in the gross domestic product (GDP) is anticipated to be 3.5%. For 2009, health spending is projected to increase 5.5%. The health share of GDP is expected to increase from 16.2% in 2007 to 16.6% in 2008 and to 17.6% in 2009. The public share of total health care spending is expected to rise from 46.2% in 2007 to over 50% by 2016. Within Medicare, prescription drugs are projected to be the fastest growing component of the program’s spending from 2007 to 2018. Medicaid spending growth is expected to slow from 9.6% in 2009 to 7.8% in 2012 due to projected improving economic conditions. 

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This post was written by Karl A. Thallner, Jr., Carol C. Loepere, Debra A. McCurdy, Brad M. Rostolsky, Jacqueline B. Penrod, and Amie E. Schaadt.

On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”). The sweeping $790 billion economic stimulus package includes a number of health care policy provisions. Reed Smith's Health Care Memorandum summarizes the major health policy provisions of the Act.

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CMS has re-issued the draft 2010 Medicare Advantage (MA), Medicare Advantage-Prescription Drug (MA-PD), Cost-Based Plan, and Stand Alone Prescription Drug Plan (PDP) Call Letter for public comment. CMS originally released a draft Call Letter for public comment on January 8, 2009 and withdrew it on January 22, 2009 pending further review. Comments/concerns should be submitted to CMS by March 6, 2009; comments already submitted based on the January 8, 2009 version of the draft Call Letter, if they are still relevant to the revised document, should be resubmitted. 

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On February 27, 2009, CMS published a notice announcing the dates for the 2009 Healthcare Common Procedure Coding System (HCPCS) public meetings to discuss CMS’s preliminary coding and payment determinations for public requests for revisions to the HCPCS, including dates to consider new drug code requests.  The meeting dates are as follows: 

April 28, 2009: Drugs/Biologicals/Radiopharmaceuticals/Radiologic Imaging Agents (CMS notes that the April 29 date is tentative and may not be needed)

May 12 - 13, 2009: Supplies and Other Items

May 27, 2009: Orthotics and Prosthetics

May 28, 2009: Durable Medical Equipment (DME) and Accessories

July 9, 2009: DME and Accessories, including Negative Pressure Wound Therapy (NPWT) devices.

The notice outlines deadlines for primary speakers and other attendees. Draft agendas, including a summary of each request and CMS’s preliminary decision, will be posted on the CMS website at least 4 weeks before each meeting.

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On February 19, 2009, CMS published a notice announcing that it is delaying the effective date of the January 16, 2009 interim final rule with comment period implementing certain changes to the Medicare durable medical equipment, prosthetics, orthotics, and supplies ("DMEPOS") competitive bidding program mandated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). Specifically, the effective date has been delayed from February 17, 2009 until April 18, 2009 to give Department officials the opportunity for further review of the issues of law and policy raised by the rule.  Comments on the delay will be accepted until March 23, 2009. Note that the original comment period on the January 16 rule remains unchanged; the public has until March 17, 2009 to submit comments on the substantive policy issues discussed in the rule.

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In conjunction with the Obama Administration’s ongoing regulatory review, CMS has announced a delay in the effective date of its December 3, 2008 final rule that provides states with increased flexibility to define the scope of covered Medicaid services.   Specifically, the effective date has been delayed from February 2, 2009 until April 3, 2009, and the agency is reopening the comment period through March 4, 2009. 

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CMS has announced that a bid protest regarding the award of Recovery Audit Contractors (RAC) was settled on February 4, 2009. CMS will now continue with implementation of the RAC program, under which four designated contractors will review all Medicare Part A and B paid claims to identify Medicare overpayments and underpayments. The RACs will be paid a contingency fee based on overpayments and underpayments they find. 

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CMS has issued a memo to state survey agencies clarifying CMS policies regarding the certification of laboratories performing limited public health testing. The memo also clarifies the policies and procedures for the certification of entities with multiple sites, specifically for home health agencies (HHAs) and hospices.  

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CMS is accepting suggestions for individual measures and measure groups to be included in the proposed set of quality measures for the 2010 Physician Quality Reporting Initiative (PQRI).  The deadline for suggestions is February 27, 2009. CMS will select measures for inclusion in a proposed rule, and after a period of public comment, the agency will make the final determination regarding the final set of quality measures for the 2010 PQRI. 

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CMS has rescinded its draft 2010 Medicare Advantage (MA), Medicare Advantage-Prescription Drug (MA-PD), Cost-Based Plan, and Stand Alone Prescription Drug Plan (PDP) Call Letter so it can be further reviewed by the new Obama Administration. CMS will post a new version of the draft as soon as possible. 

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On January 15, 2009, CMS announced three final national coverage determinations (NCDs) to deny Medicare coverage of certain types of serious, preventable surgical errors. Specifically, CMS will no longer cover: (1) wrong surgical or other invasive procedures performed on a patient; (2) surgical or other invasive procedures performed on the wrong body part; or (3) surgical or other invasive procedures performed on the wrong patient. The coverage policy complements CMS’s hospital-acquired conditions payment policy, under which Medicare will not make higher payments to hospitals for care associated with certain reasonably-preventable conditions unless the conditions were reported as present on admission. The NCDs are effective immediately, although implementation guidance will be issued at a later date. 

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CMS has issued Medicare Claims Processing Manual instructions clarifying what constitutes new and material evidence as good cause for reopening a Medicare claim.

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On January 20, 2009, CMS issued a letter to State Medicaid Directors advising states of their obligation to direct Medicaid providers to screen their employees and contractors for excluded persons.

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CMS has announced the launch of the Medicare Personal Health Record (PHR) Choice Pilot in Arizona and Utah to allow Medicare area beneficiaries to maintain their health record information electronically.  

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CMS has granted three-year extensions, subject to certain conditions, for three participants in the Care Management for High Cost Beneficiaries Demonstration that have successfully coordinated the care of high-cost patients. The extensions were awarded to Key to Better Health, Massachusetts General Care Management Program, and Health Hero Network, Health Buddy Project, each of which were determined to have positively impacted selected Medicare beneficiaries and met or exceeded the demonstration’s savings target. 

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On January 16, 2009, the Bush Administration released a variety of information summarizing CMS efforts to tie Medicare fee-for-service payments to quality and value of care. The documents include quality measure, resource use measurement, and value-based purchasing “roadmaps.”

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CMS has released draft 2010 Medicare Advantage (MA), Medicare Advantage-Prescription Drug (MA-PD), Cost-Based Plan, and Stand Alone Prescription Drug Plan (PDP) Call Letter. The 2010 Call Letter focuses on new regulatory requirements and other new policy clarifications and statutory requirements affecting MA and Part D programs in order help plans prepare their bids for the upcoming year. CMS will separately issue technical and procedural clarifications regarding bid and formulary submissions, benefits, HPMS data, CMS marketing models, and other operational issues of interest to sponsoring organizations. Comments on the draft will be accepted through January 30, 2009.

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December 29, 2008, CMS announced that it has revoked the billing privileges of more than 1,100 medical equipment suppliers in south Florida and the Los Angeles area as part of its DMEPOS High-Risk Suppliers Demonstration. In addition, CMS has suspended payments to a number of home health agencies (HHAs) in the Miami-Dade, Florida area. To further address waste, fraud, and abuse, CMS is implementing extensive pre- and post-payment review of claims submitted by ordering/referring physicians; validating claims submitted by physicians who order a high number of certain items or services by sending follow-up letters to these physicians; verifying the relationship between physicians who order a large number of home health services and the beneficiaries for whom they ordered those services; and identifying and visiting high risk beneficiaries to ensure they are appropriately receiving the services for which Medicare is being billed. 

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CMS has announced the sites for its Acute Care Episode (ACE) demonstration, under which CMS will test the use of a bundled payment for both hospital and physician services for a select set of inpatient episodes of care. The demonstration seeks to encourage hospitals and physicians to develop efficiencies in the care they provide to beneficiaries through quality improvement in clinical pathways, improved coordination of care among specialists, and provider incentive programs (i.e., “gainsharing”). The sites for the demonstration are: Baptist Health System in San Antonio, Texas; Oklahoma Heart Hospital LLC in Oklahoma City, Okla.; Exempla Saint Joseph Hospital in Denver, Colo.; Hillcrest Medical Center in Tulsa, Okla.; and Lovelace Health System in Albuquerque, N.M. These facilities will receive bundled payments for 28 cardiac and 9 orthopedic inpatient surgical services and procedures, beginning in early 2009. 

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On January 7, 2009, CMS announced the final five Medicare Administrative Contractors (MAC) that will process and pay Medicare Part A and Part B fee-for-service claims in 14 states. CMS now has met its goal of awarding all 15 MAC contracts.  When fully operational the Part A and Part B MACs will completely replace the fiscal intermediaries and carriers that have administered Medicare since its inception. 

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CMS has posted an advance copy of updated Hospice Interpretive Guidance, which are used by state survey agencies to assess hospices' compliance with federal conditions of participation.

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On January 8, 2009, CMS announced that more than 3,000 hospitals – or 99.3 percent of participating hospitals -- will receive the full Medicare payment update for calendar year (CY) 2009 as part of the new Hospital Outpatient Quality Data Reporting Program. The reporting program was mandated by the Tax Relief and Health Care Act of 2006, and applies to all hospitals paid under the hospital outpatient prospective payment system (OPPS). Under this program, eligible hospitals that successfully report outpatient quality data receive the full market basket update; those that do not receive an update that is reduced by 2.0 percentage points. 

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CMS has posted the Medicare Part B drug and biological average sales price (ASP) amounts for January 1 to March 31, 2009.  According to CMS, average payment amounts for all drugs increased 1% compared to the last quarter of 2008. 

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On December 10, 2008, CMS provided further guidance on accreditation requirements for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) under the Medicare for Patients and Providers Act of 2008 (MIPPA). MIPPA exempts certain eligible professionals from the general September 30, 2009 accreditation deadline if unless CMS determines that the quality standards are specifically designed to apply to such professionals and persons. The eligible professionals to whom this exemption applies include physicians, physical therapists, occupational therapists, qualified speech-language pathologists, physician assistants, and nurse practitioners. Also as authorized by MIPPA, CMS has specified that certain “other persons” – specifically orthotists, prosthetists, opticians, and audiologists – are exempt from the general accreditation requirements. CMS will issue rules in 2009 on how the quality standards apply to these eligible professionals and other persons. CMS also has clarified that individuals not included in this exemption list, such as pedorthotists, mastectomy fitters, orthopaedic fitters/ technicians or athletic trainers applying for Medicare enrollment in order to bill for Medicare Part B services are not exempt from meeting the September 30, 2009 deadline for DMEPOS accreditation. 

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CMS has provided additional guidance on a provision of the November 19, 2008 final Medicare physician fee schedule rule for calendar year 2009. In the final rule, CMS adopted a requirement that an entity providing mobile diagnostic testing services enroll with Medicare as an Independent Diagnostic Testing Facility (IDTF), comply with the IDTF performance standards, and bill Medicare directly for its services (although CMS did not require a mobile testing entity to bill directly for its services they are furnished “under arrangement” to hospitals). In a frequently-asked question dated December 15, 2008, CMS clarifies that if the mobile provider of testing services provides only the equipment and the non-physician technicians, they are not required to enroll and bill as an IDTF. Note, however, that if the mobile provider also provides the physician supervision of the test as well as the equipment and the technician, the mobile entity would be required to enroll and bill as an IDTF effective January 1, 2009. 

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CMS has released the detailed specifications for the 2009 Physician Quality Reporting Initiative (PQRI) measures and the 2009 PQRI measures groups. In addition, a new 2009 PQRI Implementation Guide instructs physicians on how to implement 2009 PQRI claims-based reporting of measures to facilitate satisfactory reporting of quality data codes. 

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On December 18, 2008, CMS posted quality ratings for the nation’s Medicare- and Medicaid-participating nursing homes on the CMS Nursing Home Compare Web site. Each facility has been assigned a “star rating” based on health inspection results, quality measures, and staffing levels. CMS acknowledges certain limits to its rating system, including, among other things, state variations in inspection and licensing requirements, the fact that the staffing levels represent just a “snap-shot in time,” and lack of adjustments in quality measures for differences in nursing home patient populations. CMS recommends that the nursing home quality rating system be used with other sources of information. 

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CMS has awarded contracts to review the medical necessity of long term care hospital (LTCHs) stays, as authorized by the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). Specifically, CMS has awarded contracts to AdvanceMed to perform LTCH sampling and validation, and to Wisconsin Physician Services (WPS) to perform medical review of LTCH claims to determine a national error rate for LTCHs. WPS will use existing inpatient hospital review criteria in order to determine the medical necessity of admission. CMS expects the medical reviews, which are scheduled to begin in January 2009, to help contractors to recover overpayments and determine if additional review is necessary.

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Applications for new or revised Healthcare Common Procedure Coding System (HCPCS) codes for the 2010 update are due January 5, 2009. 

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As previously reported, CMS announced in September that the 2009 Medicare Part B drug competitive acquisition program (CAP) is being postponed indefinitely. The CAP is a voluntary program that offers physicians the option to acquire many injectable and infused Part B drugs from an approved CAP vendor, rather than buying and billing the drugs directly.  In preparation for the 2009 CAP postponement, CMS has provided information to physicians on claims submission deadlines for drugs administered in 2008, the procedures for dealing with CAP drugs not administered by December 31, 2008, and emergency restocking of CAP drugs for dates of service on or before December 31, 2008. 

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On December 2, 2008, CMS proposed three national coverage determinations (NCDs) to deny Medicare coverage of certain types of serious, preventable surgical errors. Specifically, under the proposed NCDs, Medicare would not cover: (1) wrong surgical or other invasive procedures performed on a patient; (2) surgical or other invasive procedures performed on the wrong body part; or (3) surgical or other invasive procedures performed on the wrong patient. The coverage policy is intended to complement CMS’s hospital-acquired conditions policy, under which Medicare will not make higher payments to hospitals for care associated with certain reasonably-preventable conditions unless the condition were reported as present on admission. CMS will accept comments on the proposed coverage policies until January 1, 2009.  

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CMS has released an “Issues Paper” as part of it’s plan to transition to a Medicare value-based purchasing program for physician and other professional services, as required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).  

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CMS has released the 2009 Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule. The update reflects payment changes mandated by the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. Specifically, MIPPA reduces the nationwide fee schedule amount of most items included in Round 1 of the DMEPOS competitive bidding program by 9.5% for 2009 (six oxygen codes included in Round 1 will receive a 0% update rather than the 9.5% reduction). Non-competitive bid items will receive a 5.0% update for 2009. 

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CMS (through The Lewin Group and its subcontractors) is developing a preliminary set of outpatient imaging efficiency measures. CMS is soliciting comments on these measures until December 14, 2008.   

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On November 17, 2008, CMS reported that the improper payment rate for the Medicare, Medicaid and SCHIP programs fell from 3.9% in FY 2007 to 3.6% percent in FY 2008. For the Medicare fee-for-service program, most improper payments were due to claims for services that were medically unnecessary or incorrectly coded, while the vast majority of Medicaid and SCHIP errors are due to inadequate documentation. CMS also reported the Medicare Advantage improper payment rate for the first time; that rate was 10.6% in 2006, primarily reflecting health plan errors in documenting members’ diagnoses. CMS also is developing methodologies to report the Medicare Part D error rate in the future.

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CMS has released a document entitled “Medicare’s Practical Guide to the E-Prescribing Incentive Program,” which explains the e-prescribing incentive program, how eligible professionals can participate, and how to choose a qualified e-prescribing system.   

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On November 14, 2008, CMS issued a letter to state Medicaid directors to gauge interest in the upcoming “Medicare Nursing Home Value-Based Purchasing" demonstration. The three-year “pay-for-performance” initiative seeks to assess the quality of care in nursing homes, based on selected measures of quality, and then make additional payments to those nursing homes with higher quality performance. States interested in hosting the demonstration are asked to provide certain information to CMS by January 9, 2009. CMS expects to select up to five demonstration states in February 2009, and then CMS will solicit nursing homes within those states to participate in the demonstration. 

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On November 13, 2008, CMS announced the 15 chronic conditions certain Medicare Advantage special needs plans (SNPs) must use to identify the beneficiary populations eligible for enrollment, beginning in 2010. SNPs are a type of MA plan that serve only beneficiaries living in institutions, eligible for both Medicare and Medicaid, or living with severe or disabling chronic conditions. For SNP purposes, chronic conditions are defined as being medically complex, substantially disabling or life threatening, having a high risk of hospitalization or other adverse outcomes, and requiring a specialized delivery system across domains of care. The specific clinical conditions identified as meeting this definition are: chronic alcohol and other drug dependence; certain autoimmune disorders; cancer excluding pre-cancer conditions; certain cardiovascular disorders; chronic heart failure; dementia; diabetes mellitus; end-stage liver disease; end-stage renal disease requiring dialysis (all modes of dialysis); certain severe hematologic disorders; HIV/AIDS; certain chronic lung disorders; certain chronic and disabling mental health conditions; certain neurologic disorders; and stroke. 

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CMS has released the 2009 update of the Healthcare Common Procedure Coding System (HCPCS) code set.

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On October 28, 2008, CMS informed state health officials of CMS policy regarding the refunding of the federal share of Medicaid overpayments, damages, fines, penalties, and any other component of a legal judgment or settlement when a state recovers pursuant to legal action under its state False Claims Act (FCA). CMS notes that many states have enacted their own FCA statutes modeled on the Federal False Claims Act, and numerous questions have arisen regarding Medicaid overpayment identification, investigation, and refunds of the federal share when that overpayment is attributable to fraud and abuse. Additionally, the letter explains what amounts must be returned to the federal government on any recovery, the proper accounting of the relator’s share and litigation expenses, and the time frame for refunding the federal share of any state FCA recovery.

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The Secretary of the Department of Health and Human Services (HHS) has submitted to Congress the Department's annual report on Medicare national coverage determinations (NCDs). The report includes detailed information on the time periods necessary for HHS to complete and implement Medicare NCDs and other background information.

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On October 24, 2008, CMS issued a transmittal updating the Medicare Benefit Policy Manual to recognize the four authoritative compendia for use in the determination of a medically-accepted indication of drugs and biologicals used off-label in an anti-cancer chemotherapeutic regimen. The transmittal also modifies requirements for contractors to identify off-label uses that are supported by clinical research.

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CMS has released updated final quality standards for Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The new version, dated October 2008, includes a number of changes from the August 14, 2006 version, including: requirements that the supplier furnish appropriate quality equipment and services; expanded documentation requirements; additional protections related to infection control; protections against adulterated and counterfeit equipment; and a variety of revisions to the product-specific quality standards. Also with regard to suppliers, CMS is seeking final regulatory clearance from the White House Office of Management and Budget for its final Medicare DMEPOS supplier standard and security bond requirements. The text of the rules is not available at this time, but they could be published in the Federal Register in the near future.

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CMS has posted guidance for Medicare Part D prescription drug plan sponsors on compliance with its September 18, 2008 final rules updating Part D marketing regulations in conformance with the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). 

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Medicaid spending is projected to total $339 billion in 2008, up 7.3% from 2007 levels, according to figures released by CMS October 17, 2008. Medicaid spending is expected to continue increasing by 7.9% on average over the next 10 years, reaching $674 billion by 2017, far exceeding the 4.8% projected growth rate for the general economy and pointing to continued strains on state budgets in the coming years. Additional spending details are contained in the CMS Office of the Actuary’s first annual fiscal report on Medicaid.

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On October 10, 2008, CMS released details on the scoring methodology it uses to identify those nursing homes that become candidates for the “Special Focus Facility” (SFF) initiative by virtue of their more serious history of severe and persistent quality of care problems. 

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CMS is soliciting comments regarding an interim study of options for revising geographic location adjustments under the Medicare physician fee schedule, entitled “Review of Alternative GPCI Payment Locality Structures.” CMS notes that it is not proposing to make any changes to the payment localities at this time, but CMS encourages comments on the options presented in the report as well as suggestions for other options, which will be considered in the development of possible future rulemaking on this issue. Electronic comments on the interim report may be submitted to MPFS@cms.hhs.gov until November 3, 2008.

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On October 10, 2008, CMS announced that beneficiaries may now review specific Medicare Part D prescription drug plan and Medicare Advantage health plan information for 2009 online through the Medicare Prescription Drug Plan Finder and Medicare Options Compare. 

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CMS has released most of its “Medically Unlikely Edits” (MUE), which are used by Medicare contractors when processing claims to ensure that providers and suppliers do not report excessive services.   An MUE for a HCPCS/CPT code is the maximum units of service under most circumstances that a provider would report for a code for a single beneficiary on a single date of service; claims with more than the MUE edit amount will be denied (unless a modifier is used to used to report medically necessary units of service in excess of an MUE value).   The MUE currently contains edits for about 9,700 HCPCS/CPT codes, although CMS is not publishing all active MUEs since it could diminish the effectiveness of MUE edits that are designed to detect and deter questionable payments rather than billing errors. CMS will update the list quarterly. 

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CMS has announced Medicare Part A and Part B premium and deductible levels for 2009. Notably, there will be no increase in the standard Medicare Part B monthly premium for 2009, which is the first year since 2000 that there was no increase in the standard premium.

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CMS has announced the 2009 Medicare PDP and MA plan options. Details about the specific plans in each region will be available mid-October 2008. Open enrollment for 2009 prescription drug coverage begins November 15, 2008 and ends December 31, 2008.

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CMS has posted its preliminary payment determinations for certain new clinical laboratory codes. CMS is accepting comments on the payment determinations until October 10, 2008. Separately, CMS has released the October 2008 Medicare Part B prescription drug average sales price (ASP) pricing files.

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On September 10, 2008, CMS announced that the 2009 Medicare Part B drug competitive acquisition program (CAP) is being postponed indefinitely. The CAP is a voluntary program that offers physicians the option to acquire many injectable and infused Part B drugs from an approved CAP vendor, rather than buying and billing the drugs directly. While CMS notes that it received several qualified bids for the 2009-11 CAP, "contractual issues with the successful bidders resulted in CMS postponing the 2009 program." The physician election for 2009 CAP participation therefore will not be held, and CAP drugs will not be available from an approved CAP vendor for dates of service after December 31, 2008. CMS is considering implementing change to the CAP before proceeding with another bid solicitation.

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The Centers for Medicare & Medicaid Services (CMS) has posted a fact sheet on the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) accreditation provisions of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), including the provisions related to exemption of certain providers from the accreditation requirements. MIPPA section 154(b) exempts certain professionals from the accreditation requirement unless CMS determines the quality standards are specifically designed to apply to such professionals. Under this provision, CMS is exempting the following professionals: physicians; physical therapists; occupational therapists; qualified speech-language pathologists; physician assistants; nurse practitioners; clinical nurse specialists; certified registered nurse anesthetists; certified nurse-midwives; clinical social workers; clinical psychologists; registered dietitians; nutritional professionals; orthotists; prosthetists; opticians; and audiologists. In addition, MIPPA mandates that all existing non-exempt DMEPOS suppliers be accredited as meeting DMEPOS quality standards by September 30, 2009 (new suppliers have been required to be accredited before applying for enrollment since March 1, 2008). To ensure time for accreditation organizations to process the applications, CMS is directing suppliers to submit a complete accreditation application to an approved accreditation organization by January 31, 2009.  On October 14, 2008, CMS is hosting an on-site conference at CMS headquarters in Baltimore for non-accredited DMEPOS suppliers to provide technical guidance on how to comply with the DMEPOS quality standards.   In a related development, CMS announced on a September 3, 2008 Open Door Forum that it intends to issue a proposed rule next year establishing new supplier standards for Medicare providers of orthotics and prosthetics.

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CMS has announced it is convening a Special Needs Plan Chronic Condition Panel to determine the conditions that meet the definition of severe or disabling chronic conditions under MIPPA. CMS will accept comments until October 8, 2008 on the criteria the panel could use for selecting conditions. CMS held a special open door forum to discuss the Panel on September 10, 2008; an audio recording of the event will be available for 30 days beginning September 17. 

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CMS has posted the fiscal year 2010 Medicare inpatient prospective payment system (IPPS) new technology application on its website. The deadline for FY 2010 applications is November 17, 2008.

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CMS has announced the names of 32 registries that have been qualified by CMS to submit quality data on behalf of their participants for the 2008 Physician Quality Reporting Initiative (PQRI) registry submission option.

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CMS has released the “Innovator’s Guide to Navigating CMS,” which compiles key Medicare coverage, coding, and payment information in a single source. Other background information also is posted at the CMS web site. 

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On August 20, 2008, CMS announced  that it is updating the data available on the Hospital Compare consumer Web site to include a pneumonia mortality measure, children’s asthma care measures, and data on each hospital’s risk-standardized mortality rate.

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CMS has released the 2009 Part D national average monthly bid amount, the Medicare Part D base beneficiary premium, the Part D regional low-income premium subsidy amounts, and the Medicare Advantage regional benchmarks.  In addition, CMS has issued guidance to clarify its “best available evidence” (BAE) policy, which requires Part D drug plan sponsors to establish the appropriate cost-sharing for low-income beneficiaries when presented with evidence that the beneficiary's information is not accurate. 

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CMS is soliciting comments regarding whether the agency should undertake Medicare national coverage determinations (NCDs) regarding a wide range of medical technologies. CMS will accept comments until September 28, 2008, on whether a review should or should not proceed prior to the formal decision to open an NCD, based on: 1) a significant number of inquiries from the public, providers, or patients; 2) new evidence or a reexamination of previously available evidence; 3) inconsistent or conflicting local coverage policies; 4) program integrity concerns; 5) substantial clinical advances; 6) technologies for which rapid diffusion could have a significant programmatic impact; or 7) significant uncertainty about the health benefit, patient selection, or appropriate facility and staffing requirements for a new technology. The specific technologies under review are as follows: thrombopoiesis stimulating agents, erythropoiesis stimulating agents, levocarnitine, parenteral iron supplementation, bisphosphonates, gene expression profiling tests, treatment of wet AMD, proton beam therapy for prostate cancer, artificial cervical discs, minimally invasive methods for bariatric surgery, biological therapies for treatment of chronic wounds, bone morphogenetic protein, hip resurfacing, ablation for atrial fibrillation, off label use of drug eluting coronary stents, vertebroplasty and kyphoplasty, lumbar fusion for degenerative disc disease, peripheral arterial stenting and vascular intervention, and pharmacogenomic testing. 

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CMS has posted the Medicare Evidence Development & Coverage Advisory Committee (MedCAC) Medicare Evidentiary Priorities list, which lists research topics on clinical practice for which there are significant knowledge gaps. CMS encourages researchers to consider these research priorities when designing studies for items or services that have a direct impact on the health of the elderly. CMS is working with the Agency for Healthcare Research and Quality (AHRQ) to develop a process for future revisions to the priority list. CMS is accepting comments on both the Medicare Evidentiary Priorities List and a process for revising the list, although no comment deadline is provided.

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On August 8, 2008, CMS announced a pilot program that will test options for Medicare beneficiaries in Arizona and Utah to maintain their health records electronically using one of several commercial personal health record (PHR) tools beginning in January 2009.  Medicare will transfer up to two years of the individual’s claims data into the individual’s PHR. CMS has released a solicitation to potential PHR vendors to participate.

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When MIPPA was enacted July 15, 2008, it included a number of retroactive Medicare policy provisions. CMS has begun providing guidance on implementation of these provisions, including the positive update in the physician fee schedule, the reinstatement of the therapy cap exception process, and the ability of all suppliers to furnish items in the first round DMEPOS competitive bidding areas (CBAs) at fee schedule rates. Likewise, CMS has announced that as a result of MIPPA enactment, the special accreditation deadlines previously established for the second round of the DMEPOS competitive bidding program have been cancelled, although the September 30, 2009 deadline for accreditation of all DMEPOS suppliers still is in effect. 

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CMS has announced that the recovery audit contractors (RACs) demonstration program corrected over $1 billion of Medicare improper payments from 2005 through March 27, 2008. Approximately 96% of the improper payments ($992.7 million) were overpayments collected from providers (with 85% of the overpayments collected from inpatient hospitals), while the remaining 4% were underpayments repaid to providers. 

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Congress’ failure to enact legislation prior to July 1, 2008 to avert the 10.6 percent Medicare physician fee schedule cut that went into effect July 1, 2008 has triggered certain CMS administrative actions.   CMS has instructed its contractors to hold claims for physician fee schedule services provided in July for the first 10 business days of July. After 10 business days, contractors will begin releasing claims into processing, which will reflect the negative 10.6 percent update. If a new law is enacted which retroactively restores funding, CMS could automatically reprocess most previously-processed claims. CMS notes that providers may hold claims until it becomes clearer whether new legislation will be enacted or until cash flow becomes problematic to reduce the need to reconcile payments and simplify beneficiary billing. CMS also has reminded providers that the exception process related to outpatient therapy caps also expired June 30, 2008 since Congress did not extend the effective date of the program. Likewise, CMS has instructed contractors that due to the expiration of statutory authority, independent laboratories may no longer bill the carrier for the technical component of physician pathology services furnished to patients of a covered hospital for services on or after July 1, 2008.  Note that while Congress subsequently passed legislation by a veto-proof margin to increase physician payments and extend these expiring provisions, the timing of enactment is still unclear (see related legislative story).

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The first round of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program went into effect July 1, 2008 in 10 geographic areas for selected categories of products, although legislation has been approved by Congress that would delay the first round of bidding and make other reforms in the bidding process (see related legislative story).   Nevertheless, CMS continues to provide guidance to suppliers, beneficiaries, and referral sources on implementation of the new program.   For instance, CMS has issued new manual provisions with special billing instructions for claims subject to the DMEPOS competitive bidding program.  CMS also has clarified the distinctions between retail and mail order suppliers for purposes of competitive bidding (mail order diabetes supplies, but not retail supplies, are subject to bidding).  Moreover, CMS has updated the Supplier Directory on www.medicare.gov to reflect the names of contract suppliers (although CMS has noted that the database may not yet be complete). For more information, see the CMS web site.

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CMS has updated its list of authorized compendia that may be used in determining medically-accepted indications of drugs and biologicals used off-label in an anti-cancer chemotherapeutic regimen under Medicare Part B. Specifically, CMS will add Elsevier Gold Standard’s Clinical Pharmacology compendium to the list of Medicare anti-cancer treatment compendia. Earlier this year, CMS approved the NCCN Drugs & Biologics Compendium and Thomson Micromedex DrugDex. More information is available here.

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On June 18, 2008, CMS announced it will be launching a “five-star” rating system for nursing facilities to help patients and their families assess nursing home quality. CMS will begin publishing ratings in December 2008.  During June and July 2008, CMS is soliciting comments on the initiative, and the agency plans to hold an “open door” phone conference on the proposal on June 24, 2008. CMS plans to work with other health care providers and consumers to make similar rating systems available for hospitals, home health agencies, and end-stage renal disease (ESRD) facilities in the future. 

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CMS has posted the Medicare Part B drug and biological average sales price (ASP) payment amounts for July 1, 2008 to September 30, 2008.

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CMS has updated its list of authorized compendia that may be used in determining medically-accepted indications of drugs and biologicals used off-label in an anti-cancer chemotherapeutic regimen under Medicare Part B. As noted in a June 5, 2008 press release, CMS will now recognize the National Comprehensive Cancer Network (NCCN) Drugs & Biologics Compendium as an additional source of information and cease use of the American Medical Association Drug Evaluations (AMA-DE) compendium. CMS is expected to post additional updates in the near future on its website.

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In preparation for implementation of the first phase of the Medicare DMEPOS competitive bidding program on July 1, 2008, CMS has been posting new educational resources on its web site. Recent publications include new "tip sheets" for grandfathered suppliers and referral sources (e.g., providers and home health agencies) and an educational article explaining new Medicare manual instructions related to the bidding program.

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CMS is moving from annual reviews of the Part D prescription drug program model formulary to a three-year review cycle, given the "success and stabilization of recent versions of the Model Guidelines." 

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CMS has announced that its contractor, L&M Policy Research, LLC, is soliciting comments until June 9, 2008 on potential imaging efficiency measures, which CMS could use in the future to revise Medicare imaging coverage and/or payment policy. 

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CMS has released the names of the 325 suppliers that have signed contracts to participate in round one of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. Effective July 1, 2008, Medicare beneficiaries in 10 geographic regions will be required to obtain certain types of DMEPOS from one of these contract suppliers (with very limited exceptions). In connection with implementation of round one, CMS has issued new Medicare manual provisions to reflect competitive bidding payment policies, and it has announced special transition rules for certain power mobility devices.  In addition, CMS has posted sample letters for non-contract suppliers to use to notify beneficiaries whether or not they have elected to become a grandfathered supplier.   Finally, CMS has issued revised accreditation deadlines for round two of the competitive bidding program, which is expected to go into effect in 70 areas next year. Suppliers in these regions must be accredited or have applied for accreditation by July 21, 2008 (instead of May 14, 2008), and they must be accredited by January 14, 2009 (instead of October 31, 2008). For more information on accreditation, click here.

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CMS has launched the Acute Care Episode (ACE) demonstration program, under which hospitals will test the use of a bundled payment for both hospital and physician services for certain cardiac and orthopedic inpatient surgical services. The ACE demonstration goals are to: improve quality for Medicare beneficiaries; produce savings for providers, beneficiaries, and Medicare using market-based mechanisms; improve price and quality transparency, and increase collaboration among providers (including allowing certain voluntary gainsharing arrangements). There will be an informational teleconference for this demonstration on June 4 from 3 to 4:30 p.m. EST (dial 1-888-982-4492; the participant passcode “Acute Care”). 

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CMS has updated the Medicare Claims Processing Manual with instructions for hospital billing of replaced devices that are received without cost or with a credit, effective October 1, 2008. The instructions also address how Medicare inpatient prospective payment system (IPPS) payment is reduced based on the replacement device credit received by the hospital.

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CMS has issued detailed guidance on outpatient therapy services, including personnel qualifications and the timing of recertification of plans of care, effective January 1, 2008.

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CMS is conducting a demonstration project testing the use of internet-based personal health records for Medicare beneficiaries in South Carolina.

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CMS is soliciting self-nominations from clinical data registries interested in becoming a part of the submission process for the 2008 Physicians Quality Reporting Initiative (PQRI) Program. Nominations will be accepted until May 31. Background on the PQRI is available here.

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CMS has announced that Medicare MA aged and disabled capitation rates will increase by approximately 3.6% for 2009. CMS also is launching a new audit initiative to determine the accuracy of the diagnosis code information submitted by MA plans, which potentially could lead to an adjustment in 2010 rates. CMS also announced the statutory parameters for the defined standard Part D prescription drug benefit for 2009, including: a $295 deductible, a $2,700 initial coverage limit, a $4,350 out-of-pocket threshold, and minimum cost sharing of $2.40 for generic/preferred multisource drugs and $6 for other drugs in the catastrophic coverage phase. For more information, click here.  

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A federal court judge has granted a preliminary injunction blocking CMS from announcing winning bidders or otherwise implementing the Medicare clinical laboratory competitive bidding demonstration planned for the San Diego, California area. CMS had been scheduled to announce winning bidders this month, but is barred from doing so until further court order. Additional CMS background information is posted here. 

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CMS has announced a series of changes designed to encourage physician participation in the Physician Quality Reporting Initiative (PQRI). Under the PQRI, eligible professionals who satisfactorily report data on specified quality measures for covered professional services can receive an incentive payment equal to 1.5 percent of their total allowed charges for covered services during the reporting period (subject to a cap).  For 2008, in addition to submitting PQRI data through Medicare claims submissions, CMS will allow eligible professionals to report data to a medical registry, and these registries will then report that data to CMS. Professionals can choose to report data on either individual measures or on groups of related measures.

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CMS issued revised CMS-855 Medicare enrollment applications in March 2008. With limited exceptions, Medicare contractors will continue to accept the 2006 version of the application through June 2008. For more information, click here. 

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Herb Kuhn has been named acting director of the CMS Center for Medicaid and State Operations, replacing Dennis Smith.  Mr. Kuhn also will continue to serve as deputy administrator of CMS.

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On March 20, CMS announced the winning bid prices for the first round of competitive bidding, with reimbursement averaging 26% below Medicare fee schedule amounts.  With respect to the individual product categories, the average percentage savings compared to the current fee schedule amount are as follows:

• Oxygen and Oxygen Equipment:  27%
• Standard Power Wheelchairs, Scooters and Related Accessories:  21%
• Complex Rehabilitative Power Wheelchairs and Related Accessories:  15%
• Mail Order Diabetic Supplies:  43%
• Enteral Nutrients, Supplies, and Equipment:  26%
• Continuous Positive Airway Pressure Devices, Respiratory Assist Devices, Related Supplies & Accessories:  29%
• Hospital Beds and Related Accessories:  29%
• Negative Pressure Wound Therapy Pumps/Related Supplies & Accessories: 14%
• Walkers and Related Accessories:  27%
• Support Surfaces:  36%

A CMS fact sheet regarding the bid price announcement is available here.  Payment amounts for each item in each CBA, along with a chart detailing the number of contracts offered for each product category in each CBA, are available here. Contract suppliers will be announced once all contracts have been executed.

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CMS has posted the final 2009 Medicare Advantage (MA), Medicare Advantage-Prescription Drug (MA-PD), Cost-Based Plan, and Stand Alone Prescription Drug Plan (PDP) Call Letter, along with appendices.  In addition, on Monday, April 7, CMS expects to release the announcement of calendar year 2009 MA capitation rates and MA and Part D payment policies.

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CMS has released a revised version of the Advance Beneficiary Notice of Noncoverage (ABN) form (CMS-R-131), which replaces the General Use ABN (CMS-R-131-G), and the Lab ABN (CMS-R-131-L) for physician-ordered laboratory tests.  Suppliers and providers may use the ABN to inform a beneficiary that Medicare is likely to deny payment for an item or service and the beneficiary is potentially liable for payment.  Key changes include the following:  the new version can be used for voluntary notifications in place of the Notice of Exclusion from Medicare Benefits (NEMB); it has a mandatory field for cost estimates of the items/services at issue; and it allows a beneficiary to choose to receive an item/service and pay for it out-of-pocket, rather than have a claim submitted to Medicare.  The form and instructions are available here. Use of the revised form currently is optional, but it is mandatory beginning September 1, 2008.

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CMS has expanded the hospital information available on its website to include Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospital Survey information and updated pricing and volume date regarding certain elective hospital procedures provided to Medicare beneficiaries.

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CMS has proposed a series of revisions to its August 2006 quality standards for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Among other things, the revised standards would: require suppliers to notify the prescriber within five days if the supplier cannot provide the prescribed equipment; strengthen infection control requirements; require suppliers to take steps to prevent the use of adulterated, counterfeit, or misbranded products; expand documentation requirements for mail-order items; and revise specific power wheelchair and orthotics/prosthetics standards. Comments will be accepted until March 18. For details, click here.

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On February 20, CMS issued a report to Congress outlining its recommendations for implementation of a fully-bundled Medicare payment system for end-stage renal disease (ESRD) services (see ). Under the plan, which would require Congressional action, ESRD facilities would be paid a base treatment rate encompassing all services in the current “composite rate” along with those serves now separately billable (e.g., drugs, laboratory services, supplies, and blood products). The base rate would be adjusted for certain patient characteristics and comorbidities, and outlier payments could be provided for particularly expensive cases.  CMS acknowledges that it would take several years to implement a fully-bundled ESRD PPS; the President’s budget calls for implementation by January 1, 2011.

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CMS is soliciting applications for an electronic health records (EHRs) demonstration project, under which financial incentives will be provided to as many as 1,200 physician practices that use certified EHRs to improve quality as measured by their performance on specific clinical quality measures.  Total payments can equal up to $58,000 per physician or $290,000 per practice over the five-year demonstration. The demonstration will take place in 12 communities; interested communities must apply by May 13. For more information, click here. 

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Data released by CMS February 26 indicates that health care spending growth will continue to exceed overall economic growth and general inflation rates for the next decade. Growth in U.S. health care spending is projected to be 6.7% percent in 2007, and average annual growth is expected to remain near that rate through 2017. Health care spending comprises 16.3% of GDP as of 2007, and is expected to reach 19.5% of GDP by 2017 and total over $4.3 trillion.  Although Medicare spending growth slowed to 6.5% after spiking to 18.7% in 2006 with enactment of the Medicare Part D drug program, Medicare growth is expected to accelerate again, reaching 8.0% by 2017 as baby boomers begin enrolling in the program.  More data is available here. 

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CMS has issued the “Advance Notice of Methodological Changes for Calendar Year (CY) 2009 for Medicare Advantage (MA) Capitation Rates and Part D Payment Policies,” which is available here.

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CMS has released the latest Statement of Work (SOW) for Medicare QIOs, focusing on improving the quality and safety of services for beneficiaries through measurable outcomes criteria. Among other things, QIOs will be required to work with selected nursing homes and hospitals to help them improve specific quality measurements. For additional information, click here. 

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On February 12, 2008, CMS announced the names of additional SFFs – or nursing homes that had failed to improve significantly after being given the opportunity to do so. Later this year, CMS intends to provide information on ways SFFs can access additional technical assistance to help move them into compliance with federal quality of care requirements. More information can by clicking here.

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CMS has provided additional details regarding accreditation deadlines for DMEPOS suppliers. Suppliers in DMEPOS competitive bidding areas must be accredited before CMS can contract with them as winning bidders. New suppliers who apply for a supplier number before March 1, 2008 must be accredited by December 31, 2008, while new suppliers who apply on or after March 1, 2008 must be accredited before they can get a supplier number. All other suppliers must be accredited by September 30, 2009. For more information, click here.

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CMS has announced that Phase I of the MHS disease management demonstration program will end after three years of operation. Preliminary evaluations have found that the program is not meeting the statutory requirements of improved clinical quality outcomes, improved beneficiary satisfaction, and the achievement of financial savings targets. CMS will determine whether to implement Phase II of the program depending on the results of further independent evaluations.  

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The compliance date for the National Provider Identifier (NPI) for all HIPAA-covered entities except small health plans was May 23, 2007 (small health plans have until May 23, 2008 to comply). Last year CMS announced that it was deferring imposition of sanctions for noncompliance through May 23, 2008 for covered entities that deployed contingency plans to facilitate the compliance of their trading partners. On May 24, 2008, CMS will lift its enforcement-leniency policy and implement enforcement actions in response to identified violations. More information about NPI requirements is available here.

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Jeffrey Rich, M.D. has been named Director of the CMS Center for Medicare Management, effective February 18. Dr. Rich currently is Director-at-Large for the Society of Thoracic Surgeons. Liz Richter, who has held the position of Acting Director of the Center, will be serve as deputy director. 

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CMS has announced the second phase of Medicare competitive bidding for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). In this second round, competitive bidding will be implemented next year in 70 areas, including the nation’s largest cities. With very limited exception, only suppliers who are successful bidders in these regions and who meet program standards (including accreditation) will be eligible to furnish eight categories of DMEPOS to Medicare beneficiaries. The product categories for the second round are: oxygen supplies and equipment; standard power wheelchairs, and scooters; complex rehabilitative power wheelchairs; enteral nutrients, equipment, and supplies; continuous positive airway pressure devices and respiratory assist devices; hospital beds; negative pressure wound therapy pumps; and walkers (and related accessories and supplies for each category). Successful bidders will be paid based on the median of the winning suppliers’ bids for each of the selected items in the region, rather than the Medicare fee schedule or supplier bid amount. This expanded bidding program builds on the first phase of competitive bidding affecting 10 geographic regions and 10 product categories, which goes into effect July 1, 2008. For more information, click here. A Reed Smith bulletin regarding the competitive bidding program is available here.

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CMS has posted the draft combined 2009 call letter for Part D PDPs and MA plan sponsors. Comments will be accepted until January 30. CMS also is accepting comments until February 11 on proposed revisions to the CY 2009 Plan Benefit Package and Formulary Submission for MA Plans and PDPs; and the CY 2009 Bid Pricing Tool for MA Plans and PDPs. For details, click here.  

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CMS has announced that all existing durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers will need to submit proof of accreditation by a deemed accreditation organization by September 30, 2009. This requirement also will apply to physicians and other providers who submit Part B claims for DMEPOS. CMS intends to announce a separate accreditation deadline for new DMEPOS suppliers in the near future.

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CMS has announced the sites selected for its Post Acute Care Payment Reform Demonstration. Under this program, which begins later this year, a beneficiary receiving treatment for certain diagnoses will receive a comprehensive assessment upon hospital discharge to determine the appropriate post-acute care site, such as long-term care hospital, inpatient rehabilitation facility, skilled nursing facility, or home health agency. A standardized patient assessment instrument will be used in all post-acute sites to measure patient functional status and other factors at admission and discharge. The demonstration also will measure patient costs and resource use. The demonstration sites are as follows: Boston MA, Chicago IL, Dallas TX, Lakeland/Tampa FL, Lincoln NE, Louisville KY, Rapid City SD, Rochester NY, San Francisco/Bay Area CA, and Seattle/Tacoma WA. 

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CMS has posted the first quarter 2008 Medicare Part B drug and biological ASP payment amounts.

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On January 8, CMS is publishing a final rule regarding the option of Part D plans to lower their premiums for low-income subsidy beneficiaries. Separately, CMS has released the final 2008 Medicare Part D Reporting Requirements. Additional Part D contracting information is available here. 

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